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INCREASE IN LEASING ACTIVITY INDICATES OFFICE MARKET MAY HAVE ALREADY BOTTOMED
The South Bay office market saw some optimism in Q3 as leasing activity increased significantly over the previous quarter. While the 532,500 SF of leasing activity seen in Q3 is still below the 2005-2008 quarterly average of 816,300 SF, the amount of leasing activity seen in Q3 was a 114% improvement on the historic low of just 248,500 SF reported in Q2. Combined with slightly positive net absorption and a small decrease in the overall vacancy rate to 16.0%, it is quite possible that the South Bay office market may have already bottomed in the first half of 2009 and is slowly recovering.
Direct weighted average asking rents remained at $2.00 per square foot, per month Full Service Gross (FSG). Net absorption was 54,400 SF which ended a string of four consecutive quarters of negative net absorption market-wide. While these statistics indicate that the South Bay office
market is slowly recovering, it should be noted that overall market fundamentals, especially sales activity, remain relatively weak due to the fragile state of the overall economy. On the other hand, compared to continued space givebacks and falling rents in the neighboring West Los Angeles and Orange County office markets, the South Bay office market is holding up better relative to everywhere
else in the region.
Contact Michael Soto at 213.532.3220 for more information.
  OFFSB09Q3.pdf
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